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Fernando ArandaConservation     Measures:      “Achieving water      conservation while      maintaining sound      financ...
Conservation & Finance          THE ISSUES                  • Drought  Environmental   • Scarce & Expensive Water Resource...
You are notalone
The Cost of Water        Water/Sewer Bill Inflation        Inflation CPI2000       2001              2002                 ...
Water Utilities Are Among the MostCapital Intensive in the World* $0.11            $0.25                         $0.26    ...
AVERAGE WATER UTILITY INVESTMENT IN ASSETS FOREACH $1.00 IN REVENUE iS BETWEEN$5-$9
City of Santa Fe, NM    Oldest Capital in the USPopulation 79,627CIP $113M Next 10YearsWater Production 10,406 AFY    Acco...
Why?Is Santa Fe’s conservationstory worth telling
Consumption                     per Capita Vs. Population                     180                                         ...
The City Conservation EffortsReducedGPCD Usageby 37%Since 1995 from 168 to 105 GPCD
How?Does this Compare with OtherWestern Cities.
GPCD Comparison Western Cities        Salt Lake, UT                                                            242       L...
The Average per-capita usage in the US is:152 Gallons*Santa Fe is 30% lower than the US Average Usage*per United Nations D...
How?Was this conservation achieved.
Conservation PoliciesFinancial IncentivesSystem ImprovementsMultiple Strategies….That’s How
Combination of ConservationStrategies    Public         Water    Education      Losses     Water                          ...
Conservation can not be achieved withoutFinancial                                    The City had to implement several rat...
Financial History2000     •  Revenues fail to meet rate requirements            in bond covenants2001         •  Service c...
Financial History2010-1           • City Goes Back to the Bond Market           • Fitch Rate the City’s Outstanding Debt a...
But…How can the City maintain financial stability andpromote conservation?
ConservationRateStructureThat’s how
Fixed Charge                              Fixed Volume Charge                                Inclining Blocks             ...
The Unmentioned Side ofConservation
The Unmentioned Side ofConservation
The Unmentioned Side ofConservation
It’s NotRocket ScienceHow can you design rates that will incentivize conservationand will maintain financial stability ….
Elasticity                                      Measures the responsiveness of the                                      de...
Water is Inelastic0.1 to 0.5Increases in price produce lowerdecreases in usage
WhatAboutDroughtsA drought is the most stressful situation a utilitycan have.
Options During a Drought•  Rate Stabilization Fund•  Rate Surcharges Design  – Enhance Conservation  – Maintain revenue st...
Questions
Conservation Policies & Programs                     •  Conservation Website       Public                     •  Landscapi...
System Improvements      Water        §  Distribution System Leak      Losses           Repair & Detection      Renewable...
Financial Incentives                   •  1st Violation $20     Water         •  2nd Violation $50     Restriction   •  3r...
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Conservation Measures: “Achieving water conservation while maintaining sound financial performance”

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Fernando Aranda - Presentation at Texas Water Foundation, Central Texas Water Conservation Symposium February 26, 2013

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Conservation Measures: “Achieving water conservation while maintaining sound financial performance”

  1. 1. Fernando ArandaConservation Measures: “Achieving water conservation while maintaining sound financial performance”
  2. 2. Conservation & Finance THE ISSUES • Drought Environmental • Scarce & Expensive Water Resources • Revenue Losses • Aging Infrastructure Economic • Population Growth • Water Storage & Water Rights • Rate Increase Aversion • Short-term View Political • Affordability • Debt Finance
  3. 3. You are notalone
  4. 4. The Cost of Water Water/Sewer Bill Inflation Inflation CPI2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
  5. 5. Water Utilities Are Among the MostCapital Intensive in the World* $0.11 $0.25 $0.26 $0.77$ invested in physical assets for every $1.00 in revenue *based on most recent 12 months reported on SEC 10K report
  6. 6. AVERAGE WATER UTILITY INVESTMENT IN ASSETS FOREACH $1.00 IN REVENUE iS BETWEEN$5-$9
  7. 7. City of Santa Fe, NM Oldest Capital in the USPopulation 79,627CIP $113M Next 10YearsWater Production 10,406 AFY Accounts 33,440
  8. 8. Why?Is Santa Fe’s conservationstory worth telling
  9. 9. Consumption per Capita Vs. Population 180 82 170 80 168 160 78 76 150 139 Population (Thousands) 74Consumption (GPCD) 140 72 130 70 120 68 110 105 115 104 66 100 64 90 62 80 60 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Population GPCD
  10. 10. The City Conservation EffortsReducedGPCD Usageby 37%Since 1995 from 168 to 105 GPCD
  11. 11. How?Does this Compare with OtherWestern Cities.
  12. 12. GPCD Comparison Western Cities Salt Lake, UT 242 Las Vegas, NV 222 Reno, NV 204 Phoenix, AZ 185 Tucson, AZ 177Colorado Springs, CO 173 Austin, TX 170 Denver, CO 165 Albuquerque, NM 160 San Diego, CA 152 San Antonio, TX 146 Los Angeles, CA 145 El Paso, TX 139 Aurora, CO 121 Flagtaff, AZ 111 Santa Fe, NM 105 San Francisco, CA 86 0 50 100 150 200 250 300
  13. 13. The Average per-capita usage in the US is:152 Gallons*Santa Fe is 30% lower than the US Average Usage*per United Nations Development Program –Human Development Report 2006
  14. 14. How?Was this conservation achieved.
  15. 15. Conservation PoliciesFinancial IncentivesSystem ImprovementsMultiple Strategies….That’s How
  16. 16. Combination of ConservationStrategies Public Water Education Losses Water Restriction Fee Fixtures Renewable Water Rate Structure Water Restriction Rebates
  17. 17. Conservation can not be achieved withoutFinancial The City had to implement several rate adjustments to meet their revenue requirementsStabilityWhich Hasn’t been easy
  18. 18. Financial History2000 •  Revenues fail to meet rate requirements in bond covenants2001 •  Service charges are adjusted by 76% to restore bond covenant compliance •  Recommended steps for further study •  Started work on first 10-year financial plan2003 •  Revenues meet rate requirements and bond covenants2007-0 •  Construction stars on Buckman Diversion project •  City approves a 7-year 8.2% annual9 rate increases
  19. 19. Financial History2010-1 • City Goes Back to the Bond Market • Fitch Rate the City’s Outstanding Debt at AAA • City Finished Construction of Buckman2 Diversion Project 01/2011 • City meets all bond and fund balance requirement
  20. 20. But…How can the City maintain financial stability andpromote conservation?
  21. 21. ConservationRateStructureThat’s how
  22. 22. Fixed Charge Fixed Volume Charge Inclining Blocks Simplicity ConservationRevenue Risk Seasonal Water Budget Rates Available Rate Structures
  23. 23. The Unmentioned Side ofConservation
  24. 24. The Unmentioned Side ofConservation
  25. 25. The Unmentioned Side ofConservation
  26. 26. It’s NotRocket ScienceHow can you design rates that will incentivize conservationand will maintain financial stability ….
  27. 27. Elasticity Measures the responsiveness of the demand to changes in pricesAllows you to anticipate the reductionin consumption for any increase in price
  28. 28. Water is Inelastic0.1 to 0.5Increases in price produce lowerdecreases in usage
  29. 29. WhatAboutDroughtsA drought is the most stressful situation a utilitycan have.
  30. 30. Options During a Drought•  Rate Stabilization Fund•  Rate Surcharges Design – Enhance Conservation – Maintain revenue stability
  31. 31. Questions
  32. 32. Conservation Policies & Programs •  Conservation Website Public •  Landscaping Classes Education •  Radio Show •  Children conservation programs •  Over 8,000 high flush toilets were Fixtures replaced for Ultra-low flush toilets •  Automated Meter Reading Program Water •  May 1 – October 31 No Restriction outdoor irrigation from 10 am to 6 pm
  33. 33. System Improvements Water §  Distribution System Leak Losses Repair & Detection Renewable §  Buckman Diversion Project Water §  Storage of San Juan Chama Water
  34. 34. Financial Incentives •  1st Violation $20 Water •  2nd Violation $50 Restriction •  3rd Violation $100 Fee •  4th and each additional Violation $200 •  High-efficiency washing machine ($150 - $350) Rebates •  High-efficiency toilet ($125 - $500) •  Water free urinals ($500) •  Water Harvesting ($12 - $50) Rate •  Inclining block rate structure Structure

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